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Trump Criticizes Fed Again, Calls for Drastic Interest Rate Cuts

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Business Honor - Trump Criticizes Fed Again, Urges Drastic Interest Rate Cuts Now

Business Honor
01 July, 2025

Trump pushes for lower rates as Fed faces economic uncertainties and leadership changes.

President Donald Trump on Monday again criticized the U.S. Federal Reserve and its chairman, Jerome Powell, calling for drastic interest rate reductions to stimulate the economy. In a letter to Powell personally, Trump claimed that the U.S. policy interest rate should be at 0.5% to 1.75%, the same level as nations such as Japan and Denmark. Trump also went on social media to repeat his criticism, labeling the job of central banker in the U.S. "one of the easiest, yet most prestigious jobs," but complaining that the Fed had "FAILED" to act more forcefully.

Trump's remarks are made against the backdrop of growing fears over economic expansion, with inflation still over the Fed's 2% threshold and unemployment remaining low. As daunting as these issues have been, Fed policymakers have been reluctant to reduce rates from their present span of 4.25% to 4.5%, reflecting fears regarding tariff effects and their ability to further boost inflation. They've said they would like to wait for more definite indications that the effect of tariffs will not heighten inflation before doing something.

In the meantime, Treasury Secretary Scott Bessent is weighing the Fed's future leadership since Powell's term expires in May 2026. Bessent indicated the possibility of a changeover next year while suggesting Governor Christopher Waller and other potential candidates to take the chair.

Economists are also observing closely, since Goldman Sachs adjusted its estimate and now predicts the Fed will begin lowering interest rates as soon as September. The most important data to watch for will be the jobs and inflation reports in the weeks ahead, which could still have an impact on the Fed's deliberations. The July 9 termination of some of Trump's tariffs will also be a pivotal date, with possible effects on both inflation and policy direction.